November was a big month for corporate social responsibility (CSR). Business for Social Responsibility (BSR) – an organization that promotes CSR – held its annual conference titled “BSR Innovative Strategies -- Measurable Impacts” in New York City. A New York Times columnist noted the turnout: “it only seemed as though half of corporate America ground to a halt to attend. Starbucks was there, of course, in force, but companies like Chevron, J. C. Penney, Pfizer, McDonald's, Ford Motor and Exxon Mobil all had representatives...”
During the same week, BP – the oil company – announced a settlement of a lawsuit stemming from a tragic explosion in its Texas City, TX refinery that killed 15 workers and hurt 170 others in 2005.
What’s the relationship? While BSR extolled CSR’s virtues in Manhattan, BP – a leading disciple of CSR – was reeling from implementing its false promises.
CSR is the latest trend in corporate America. According to CSR theory, governments alone are not capable of tackling the world’s most pressing problems so businesses, with their enormous financial resources, must play a role in alleviating poverty, improving global health and protecting the environment.
At its core, CSR expands the responsibility of business beyond its traditional definition of obeying the law and making a profit for its shareholders – easily measured criterion – to subjective goals like social benefits and environmental sustainability.
Social advocates frequently seduce companies into the CSR web by claiming there is a financial benefit. A recent advertisement promoting the BSR conference stated “When done well, CSR builds business value in diverse ways: by enhancing brand image, establishing a more cooperative relationship with government regulatory agencies and garnering the interest of investors who are interested in issues related to sustainability.”
Taking this at face value, what’s not to like: CSR builds brands, builds relationships with regulators and attracts shareholders.
The adage “if it sounds too good to be true it probably is” certainly applies to BP’s CSR experience.
Lord Browne, BP’s chief executive, decided to define its social responsibility by responding to society’s negative perception of oil companies. BP hired Ogilvy – a public relations company – to “help BP transcend the oil sector, deliver top-line growth, and define the company as innovative, progressive, environmentally responsible…” To achieve that goal BP needed to be a company “that confronts such difficult issues as the conflict between energy and environmental needs and takes actions beyond what is expected of an oil company”.